Friendly reminder from GAO: You’re about to hit the entitlement iceberg, people

posted at 8:31 pm on December 4, 2012 by Mary Katharine Ham

The Government Accountability Office warned in a report
Monday that if cuts are not made to mandatory spending — including
Social Security and Medicare — there will be a fundamental gap between
spending and revenue as more baby boomers retire.
“Significant actions to change the long-term fiscal path must be taken,” the GAO warned.

Strangely, the Government Accountability Office does not headline
this report with the $800 billion we can raise over 10 years from tax
hikes on those making over $250K as a killer solution to our
“unsustainable long-term fiscal path.” Odd, that. What it does headline
is huge debts caused by entitlement spending— that’d be the spending
Republicans have signaled a willingness to tackle while Democrats have
insisted we stop up our ears and get to the tax hikin’. The whole paper
is here.

The Alternative baseline — the non-magic unicorn
baseline — is the one you should pay attention to. The real difference
between Baseline Extended and Alternative is that the latter assumes an
unreformed entitlement system.
And the longer we wait to deal with the entitlement debt problem,
the bigger the problem becomes and the more dramatic action will be
needed to wrangle it.

For example, to keep debt held by the public as a share
of GDP in 2086 from exceeding its level at the beginning of 2012
(roughly 68% of GDP) in our Alternative simulation, the fiscal gap is
8.3% of GDP. This means that revenue would have to increase by 46% or
noninterest spending would have to be reduced by about 32% (or some
combination of the two) on average over the 75-year period. Even more
significant changes would be needed to reduce debt to lower levels. …
However, the longer action is delayed the greater the risk that the
eventual changes will be disruptive and destabilizing. Under our
Alternative simulation, waiting 10 years would increase the fiscal gap
to nearly 10% of GDP— meaning a revenue increase of more than 54% or a
noninterest spending cut of about 37% or some combination of the two
would be required to bring debt held by the public back to its level in
2012 by 2086.

He has plenty more on why even those forecasts are likely too rosey.

Meanwhile, we have one party in Washington utterly unwilling to touch entitlements (aside from this weird peep from Hoyer today),
which rejects even Simpson-Bowles-inspired plans to address them out of
hand, yet is lauded in the press as the reasonable and adult of the two
parties. We have another party that put the guy who risked his entire
political career on a good-faith effort to reform entitlements on its
national ticket (and by the way, still won senior citizens) being
scolded for offering too few details by the party that hasn’t passed a
budget in three years. Any guess which party the naked protesters and hecklers
belong to? Adult! I don’t claim that Republicans don’t play their share
of smoke-and-mirrors games on cuts, but let’s not pretend Democrats are
paragons of putting pen to paper when the most talked-about papers were
coming from Paul Ryan, who of course was roundly punished in the press
for his work.

Oh, but the White House proposal boasts $600 billion in entitlement program cuts, you say? No, not so much:

But a good chunk of this “mandatory” money is not what
would be considered entitlement spending — or at least aimed at
health-care entitlements. The most up-to-date summary is in the
administration’s mid-session review, in which Table S-3 shows $326
billion in health-care savings and $254 billion in “other mandatory
savings.” (We had explored how Democrats sometimes mistout the
health-care savings in a previous column.)
The “mandatory” side of the budget means the changes are permanent
and not subject to annual congressional appropriations. That’s why
Geithner could call them “mandatory programs,” though at one point he
also called them “entitlement programs.” But they are not “spending
cuts” in the traditional sense.
What are some of these “mandatory savings?” The administration lists them in the original 2013 budget, and they include:
■$61.3 billion from “impose a financial crisis responsibility fee”
■$43.7 billion from “implement Internal Revenue Service program integrity cap”
■$27.4 billion from “increase employee contribution” to federal retirement programs.
■$44 billion from “adjust payment timing”
In fact, some $100 billion of these “cuts”come from Geithner’s
department. But are these cuts in the Treasury Department? No, the
numbers represent additional fees and better IRS enforcement — not what
an ordinary person would consider a spending cut. (We realize that
Republicans and Democrats may count these as cuts, looking through the
prism of the federal budget, but it still not the same thing as an
entitlement cut.)
The $44 billion from adjusting the timing in payments is especially
dubious — a one-time savings that takes place in 2022, the last year of
the budget window. Presumably, those dollars are just transferred to
the next 10-year budget window.

Chris Cillizza and David Gergen
finally noticed yesterday that Democrats and liberals seem pretty keen
on slipping over the cliff, despite possible economic damage. Yes,
that’s because they can be nearly 100 percent sure the press will never
punish Democrats for not making a deal. They haven’t punished them for
breaking the law by not passing budgets for three years, even though
they admit they simply don’t want to put their ideas on paper because
of political considerations. There was hardly a price to pay for any
failure of Obama’s first four years in office because there was a
Republican in office before him, so why wouldn’t they assume they can successfully pin the blame on Republicans still actually
in office? The calculus has to change for them if anyone expects them
to do anything that might avert debt disaster, ever. The press does us
all a disservice by not dissecting President Obama’s current plan and
four years of utter abdication on budget and debt issues with the same
gusto and skepticism it reserves for Mitt Romney’s CostCo shopping cart
contents.

All that being said, Republicans can’t ignore the fact that the
public is placing blame on them, fairly or unfairly. Counting on the
press to be fair enough to change the dynamic is a fool’s errand. It’s
therefore the responsibility of Republican leadership to present its
ideas with some kind of understanding of the unfriendly ground on which
it’s playing. For instance, at least holding a press conference for
what it hopes will be a game-changing counter-offer instead of sending
a letter that’s quickly ignored in time to get back to Obama’s talking
points. Oh, and doing this on the same day.
When given a choice between Republican infighting and a letter about a
Simpson-Bowles-like proposal by Republicans, which did Boehner think
the press would choose? Guy Benson explains how that roll-out could
have looked, here. Read the whole thing. We will all have our criticisms of what the team’s game plan should look like, but it’d be nice to have some assurance they’re at least gonna get off the bus.